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ONEOK Partners L.P. (OKS) has increased its quarterly cash distribution rate by 3.6% sequentially and 16.4% year-over-year. The new distribution rate of 71 cents per unit will be effective from the fourth quarter of 2012 and is scheduled to be paid on Feb 14, 2013 to the unitholders of record as of Jan 31, 2013.

ONEOK Partners’ new annualized cash distribution rate stands at $2.84 per unit, up 9.7% from the earlier rate of $2.59 per unit. The new annual cash distribution yield will be 4.8%, which will be higher than the industry average of 2.4%.

Previously, ONEOK Partners’ had increased its cash distribution in Oct 2012. Quarterly distribution payout climbed 3.8% to 68.5 cents per unit from 66 cents per unit. The partnership values its owners and has been trying to boost their income by hiking the cash distribution payment almost every year since 1998. Cash distribution of the partnership has surged by 78% since Apr 2006.

It is evident from ONEOK Partners’ cash distribution history that the partnership is always on the lookout for maximizing its unitholder’s wealth. In Sep 2012, the partnership expressed its intention to raise its total distribution by nearly 10% - 15% in the time span of 2012 to 2015 and maintain a minimum annual coverage ratio of 1.05 times. In 2013, ONEOK Partners’ intends to increase its cash distribution by 2 cents quarterly, subject to the required approvals.

ONEOK Partners’ third-quarter 2012 cash flow from operating activities was $620.5 million and cash balance was $963.6 million as of Sept 30, 2012. We believe strong liquidity position, including a credit facility of approximately $1.2 billion, allows the partnership to meet its anticipated cash requirements for future growth projects.

In order to continue with its growth projects, ONEOK Partners expects capital expenditure to be between $4.7 billion and $5.3 billion for the period 2013 to 2015. This calls for an additional investment in the range of $465 - $500 million. The partnership primarily intends to allocate major chunk of this additional fund for building a new natural gas processing facility in the Garden Creek III plant and allied infrastructure in eastern McKenzie County of the Williston Basin. Moreover, it plans to develop a new natural gas liquids (“NGL”) pipeline between NGL fractionation infrastructure at Hutchinson, Kansas and Medford, Oklahoma.

These initiatives would add to ONEOK Partners’ profitability in the long run, which will enable it to provide higher returns to the unitholders.

Though ONEOK Partners has strong financial position and numerous prospective future growth projects, we are concerned about unstable commodity prices, over-dependence on weather patterns, and volatile equity and credit markets, which can challenge the partnership’s future performance.

ONEOK Partners and one of its peers Buckeye Partners LP (BPL) both currently have short-term Zacks Rank #3 (Hold).

Tulsa, Oklahoma-based ONEOK Partners, L.P. is one of the largest publicly traded master limited partnerships and a leader in gathering, processing, storage and transportation of natural gas in the U.S.